Jonny come lately or last minute Lill’?

Some sense a recovery might be underway. But are we late?

It was bound to happen at some point. People have been itching to break into this bombed-out property sector for ages and start rifling through the rubble for bargains. The only surprise is that it took them so long. So should you join the hordes before it’s too late, or stand back in case of further shocks?

Prize property

In October, the Property sector celebrated net mighty inflows.

It was also the second-most popular sector among institutional investors. Investment fund platform Cofunds has also reported a surge in demand for property funds, this time from financial planners directing clients into the sector. Three property funds nestled inside the top 20 in November: Aviva Investors Property Trust, M&G Property Portfolio A Fund and SWIP Property Trust.

Commercial break

Commercial property took an early pounding in the credit crunch, and the subsequent crash in values was always going to attract value-seeking investors. The sector skipped the post-March bonanza, but rebuilding work began in earnest in July. In the third quarter, commercial property values increased for the first time since June 2007. But I wouldn’t don my hard hat just yet, because I suspect the rally may have already topped out.

A Property Charlie

I toyed with the idea of crawling back into commercial property in June in but decided against it. If you look at subsequent stock performances that could have been the wrong call.

So yes, I misfired again, although I can console myself with the thought that I made decent returns elsewhere. When you miss that kind of uplift, it’s usually a sound idea to walk away. I’ve made the mistake of trying to play catch-up before. How does that saying go: “if you see a trend – you’re usually too late”

A cold, commercial decision

I’m also sceptical because of my general chilliness towards the sector and markets compared to just a few months ago, when I was full of the joys of spring. I’m also worried that the property rally is yet another bubble built on rock-bottom base rates, and desperately needs underpinning by stronger economic fundamentals. When the twin props of loose monetary policy and generous fiscal stimulus programmes are withdrawn, the revival may quickly collapse. And if the political and economic ground shifts after the next election, businesses will suffer, and voids may increase.